Insurers wrestle with Solvency II internal model change policies

Supervisors say existing guidance has yet to be tested and may not work

Insurers are forging ahead with the development of their internal model change policies, despite uncertainty about what alterations to the model will trigger supervisory intervention.

A key consideration for firms in the development of their internal systems is the model change policy, which explains the procedure by which they are allowed to alter their models to reflect improved calculation techniques. Insurers are required to identify what counts as a major change, and what counts as a minor